Airtran Settles Shareholders Lawsuit

Airline Agrees To Pay $5 Million In Suit Over '96 Valujet Crash

ATLANTA - AirTran Airways has agreed to pay $5 million in cash and stock to settle a class-action shareholder lawsuit stemming from the crash of ValuJet Flight 592 in the Florida Everglades.

The lawsuit alleged ValuJet executives made misleading statements about the company's safety and prospects both before and after the May 1996 crash.

The crash killed 110 people, led to a three-month safety shutdown for ValuJet and tanked its stock. ValuJet later merged with Orlando-based AirTran and adopted its name.

The settlement agreement, disclosed in an AirTran financial filing, would apply to buyers of ValuJet stock from June 9, 1995, through June 17, 1996.

Previous legal filings in the case said the class consists of ``thousands of individuals and institutions.''

The settlement fund would consist of $2.5 million in cash and $2.5 million in shares of AirTran Holdings Inc. stock. How and when the money and shares would be distributed isn't yet clear.

All claims in the lawsuit would be dismissed, and AirTran would admit no wrongdoing.

A plaintiff's attorney said the settlement is preliminary and details will be filed in U.S. District Court in Atlanta by spring. If the judge in the case approves the plan, shareholders will then be asked to submit claim information.

Plaintiffs claimed the class lost ``tens of millions'' on ValuJet stock, which traded as high as $34.75 during the period but was at $6.50 when it ended.

The seven lead plaintiffs suffered losses ranging from $42,000 to $484,000, according to prior filings.

AirTran Holdings stock closed Friday at $3.031, down 6.25 cents.

Plaintiffs claimed ValuJet executives made misleadingly rosy public statements about the airline's safety and expansion plans in the months before the crash, even though it was already under government scrutiny and had been forced to curtail growth.

The airline denied the claims and initially sought to have the lawsuit dismissed.

AirTran said in the financial filing the settlement ``will not have any material effect'' on its business.

It operates under mostly new management.

Most survivor suits stemming from the crash have been settled, although about a dozen claims remain in state and federal court in Miami.

Earlier this month a judge in that case ruled the plaintiffs could seek punitive damages.